The Whitehaven Hoax. Or how the market lost $300 Million on a email.

[KnightersRevenge]

http://www.theage.com.au/opinion/society-and-culture/the-hoax-we-had-to-have-20130110-2cix8.html

To paraphrase in the extreme (those with a better grasp can correct without prejudice). A dude faked an email announcement that the ANZ were pulling funding from a coal project called Whitehaven on "ethical" grounds. It was graphically well presented but it was not the way these announcements are normally handled. None-the-less investors got wind of it and dumped the stock to the tune of $300 million dollars.

The above is an article about why the hoaxer shouldn't be charged. I'm interested in peoples opinions about this hoax and what it might tell us about how the market works, or doesn't work?

 

[IanG]

And to think this happened after the David Jones takeover hoax. Just ridiculous.

 

[jb03]

The price returned to its pre hoax level so Tinkler didn't lose money at all as claimed. If there is a seller there is a buyer so perhaps the headline one day will read about the buyers buying up the stock rather than it being "dumped".

The winners are those that bought the stock at the hoax trough.

 

[KnightersRevenge]

The price returned to its pre hoax level so Tinkler didn't lose money at all as claimed. If there is a seller there is a buyer so perhaps the headline one day will read about the buyers buying up the stock rather than it being "dumped".

The winners are those that bought the stock at the hoax trough.

Yeah I was wondering what happened with the price after the hoax was revealed. Was the price manipulated back up by the board or did it just bubble up through trading?

 

[tigergollywog]

I think this is an interesting one. There a number of issues IMO

1. Was it a hoax or is it fraud? How does it compare to regular Chaser/crappy fm radio hoaxing?
2. Noone lost $300 mill. The price went down about 3% for a little while. Similar to someone on a racetrack whispering that a horse is shin sore and its price goes from 3/1 out to 7/2 and then gets backed back into 3/1. Just highlights how abstract and absurd The Market is.
3. Christine Milnes sound bite that a) endorsed the action, effectively as desperate measures for desperate times and b) drew the comparison between coal-tobacco-asbestos, was a ripper. Vintage greens reconnecting with a bit of civil disobedience. WELL DONE CHRISTINE.
4. Got bucket loads of press and debate = very effective action. Well done young man.

 

[Streak]

Beats me how you guys can say no one lost money.

They didn't if they held their shares, but if they immediately sold when the hoax came out, they well might have.

 

[jb03]

Beats me how you guys can say no one lost money.

No one said that. There was no net loss and Tinkler didn't lose either. There may have been individuals who sold for less than they bought but perhaps some of the sellers sold for more than they bought so perhaps made money.

 

[KnightersRevenge]

I think this is an interesting one. There a number of issues IMO

1. Was it a hoax or is it fraud? How does it compare to regular Chaser/crappy fm radio hoaxing?
2. Noone lost $300 mill. The price went down about 3% for a little while. Similar to someone on a racetrack whispering that a horse is shin sore and its price goes from 3/1 out to 7/2 and then gets backed back into 3/1. Just highlights how abstract and absurd The Market is.
3. Christine Milnes sound bite that a) endorsed the action, effectively as desperate measures for desperate times and b) drew the comparison between coal-tobacco-asbestos, was a ripper. Vintage greens reconnecting with a bit of civil disobedience. WELL DONE CHRISTINE.
4. Got bucket loads of press and debate = very effective action. Well done young man.

Point 2 is the one I'm more interested in as I see parallels with the state of international financial arrangements that bankrupted Greece and Iceland. Namely when mere perception changes pretend money into real money things get batshit crazy so why do we put so much trust in this system?

 

[tigergollywog]

Yeah, our insecurity has become much more externally controlled and manipulatable. In the olden days, you might feel a bit edgy if it was too wet to get on and dig the spuds. Now we get terrified over fiscal cliffs, GFC's, global terror, global warming, Dow Jones indexes, etc, etc. Personally, I reckon if you stick to worrying about the spuds and Trent Cotchins knees, your world is a happier place.

 

[Streak]

No one said that. There was no net loss and Tinkler didn't lose either. There may have been individuals who sold for less than they bought but perhaps some of the sellers sold for more than they bought so perhaps made money.

Anyone who swallowed the hoax and sold when the price went down lost money they could have earnt selling before the price went down. And people obviously did this.

 

[tigergollywog]

Anyone who swallowed the hoax and sold when the price went down lost money they could have earnt selling before the price went down. And people obviously did this.

Yeah, but they would have had to have bought at less than %10 discount on the hoax price, cause it only went down 10%. Thats the thing that really irks me about share whingers. You buy at $1.00, the price goes to $2.00, you sell when it comes back to $1.50, youve made 50%, not lost 50%.

 

[tigersnake]

good opinion piece in Crikey.

http://www.crikey.com.au/2013/01/14/one-set-of-rules-for-the-powerful-another-for-coal-activists/

you have to a member or join in a trial offer to read it though. To summarise:

Moylan didn't benefit financially, unlike a litany of instances where CEOs have misinformed the market and got away with it (the author documents these cases in his book).
People who sold on the basis of this announcement weren't very bright, a quick check of the ASX website would have put it straight.
People who sold were not investors but gamblers.
ASIC in general are toothless when dealing with the powerful, who misinform and manipulate the market all the time, but suddenly seem hardline when a penniless greeny has transgressed.

It was a great action. If you believe the climate change science, the action is effective and ethically defensible. Continuing to burn coal knowing what we know is not ethically defensible, at least in the medium to long term.

 

[Streak]

Yeah, but they would have had to have bought at less than %10 discount on the hoax price, cause it only went down 10%.

Fair enough.